Blackstone "reduces, refinances or extends" more $52bn of debt

The Blackstone Group has “reduced, refinanced or extended” more than $52 billion of portfolio debt since the beginning of 2009, Steve Schwarzman, the firm’s chief executive officer, said during an earnings call. The figures quotes pertained to the company’s holdings across multiple strategies and asset classes.

As an example, the firm bought back debt at a discount in its portfolio company Michaels Stores and sold it for more than six times original cost, Schwarzman said.

“Another driver in some of our valuations over the last 12 months has been the ability to extinguish debt at a discount and take advantage of some of the dislocation of the credit markets to create value,” Blackstone’s president Tony James said during the call.

Earlier this year, Blackstone was able to shave off $4 billion of debt on its Hilton hotels portfolio company and push back debt maturities by two years to 2015.

Private equity firms have been working to control debt loads in the portfolios. Standard & Poor’s estimated earlier this year that about $140 billion of leveraged buyout-related loans will come due in 2014. Close to $80 billion will mature in 2013 and about $25 billion in 2015.

A number of private equity firms have had success refinancing portfolio company debt, but some critics say the moves are only temporary measures and the companies that have been through refinancings have only bought themselves more time to deal with their debt burdens.

Moody’s Investors Service reported earlier this week that casino giant Harrah’s still has a debt problem, despite refinancings, and will need to go public, sell assets or restructure. The company, bought by TPG and Apollo Global Management in 2008 for $27 billion, makes about $1.8 billion a year in interest payments.

http://www.perenews.com/article.aspx?article=54882

Japan Leisure Hotels Downgrades Revenues and EBIDTA (18%)

Japan Leisure Hotels warns that revenue and EBITDA for the year to the end of December will be lower than current market expectations.

The Yokkaichi hotel was closed for renovation for the majority of the first six months of the current financial year.

Some other hotels were experiencing reduced occupancy due to competitors aggressively reducing prices and some hotels nearing their scheduled refurbishment.

The firm said: "The asset manager is taking immediate steps to address these short term issues, where possible, and is confident that it they will be quickly resolved."

The firm said the board's long term confidence in the company's business model, based on the unique features of Japanese culture and demographics, remains unchanged.

The company will announce its half year results for the six months to the end of June on 28 September.

http://www.bfnnews.com/display/?id=3908724&sectionId=standardNews

Analyst, Hardman has the following to say -

A Trading Statement this morning says that revenue and EBITDA
for the current year will be lower than market expectations, so we
are reducing our estimates.
• Price cutting by competitors has been impacting some hotels.
One of the units has seen its REVPAR fall by 12% in recent
weeks. But some hotels are holding up well and this is not a
general trend.
• The newly refurbished Yokkaichi, the second largest hotel in
the group, has experienced a slower than expected build-up
after the refurbishment that took it out of action between
January and May. It would be premature to read too much into
eight weeks’ trading after what was supposed to be a ‘soft’ reopening,
but we (and the management) will be watching
closely for lessons to be applied to other refurbishments likely
in 2011.
• Market conditions are aggressive. This is not a surprise,
because the Japanese economy is flat, and still experiencing
price deflation. JPLH has been reducing costs, and has been
introducing marketing initiatives such as a loyalty card.
We already expected the first half to show a modest loss, because
of the loss of income from the Yokkaichi during its refurbishment.
We are now reducing our second half estimate. The effect for the
full year will be:
• Revenue growth of 2% rather than the 7% we had previously
expected.
• EBITDA of Y274m rather than the Y334m we previously
forecast. Our new forecast is still higher than the 2009
EBITDA however, the company is still moving forward.
• Adjusted profit of Y34m and eps of UK0.3p, still ahead of the
previous year, in spite of the Yokkaichi closure.
• We retain our dividend forecast at UK1.5p, 50% up on 2009.
We have pulled back our 2011 estimates also.
Overall, the announcement should have limited impact upon the
share price, because JPLH’s value lies in its potential once the
chain has reached three to five times its current size, rather than
its 2010 or 2011 earnings.

Summer bonuses at large firms rise 1st time in 3 yrs

Major Japanese companies are paying an average 757,638 yen in summer bonuses, up 0.55 percent from a year ago and the first increase in three years, the Japan Business Federation said Tuesday.

The weighted average of amounts the firms struck with their labor unions rose 1.02 percent in the manufacturing sector to 741,395 yen but dipped 0.77 percent for nonmanufacturers to 804,706 yen, said Japan's most influential business lobby known as Nippon Keidanren.

The overall data, derived from a survey on 251 firms to which 163 disclosed their average for unionized workers, suggest that bonuses have bottomed out after registering a record 17.15 percent fall last summer amid the worldwide economic slump.

The survey covered companies in 21 industries that have a workforce of at least 500 and are traded on the First Section of the Tokyo Stock Exchange.

http://www.breitbart.com/article.php?id=D9H2MRK82&show_article=1

Japan's Provinces Are Withering Away

In the Bank of Japan's Sakura Report, a regional survey akin to the Federal Reserve's Beige Book. In the July 8 report, companies from seven of Japan's nine regions expect business to worsen in the next three months. Kanto, the region that includes metropolitan Tokyo, is the only one where business anticipates any improvement.

If the economy consisted solely of urban areas like Tokyo, Osaka, and Nagoya, things would look better.

Tokyo's unemployment rate is a few notches below the national average of 5.2 percent and well below the 8 percent recorded in the north. While the young flee rural Japan, Tokyo's population has grown by 1 million in the last decade. The economy of Tokyo and its surrounding areas generates 31 percent of GDP. Factory jobs are disappearing throughout Japan as the country's multinationals shift production abroad. Still, Japan's big companies are expected to stay based in Tokyo, where the service industry is strongest and the talent pool deepest. "The disparity is widening," says economist Tamai Chino, who studies regional economies at Mizuho Research Institute.

Chino worries about the impact of the drive to cut the national deficit. Local governments rely on funds generated by taxpayers in Tokyo, a reliance that discouraged independence in the regions, according to Martin Schulz, a senior research fellow in Tokyo at Fujitsu Research Institute. "They never saw the [need] to develop their own business models, their own products, their own bridge to global markets," he says. In the July 11 upper house elections, rural voters punished Prime Minister Naoto Kan for slashing public works. With the deficit so huge, though, the cutbacks are likely to continue. For places like Atami, revival will just be harder.

The bottom line: The gap between Tokyo and rural Japan is growing ever wider. Budget cuts will accelerate rural decline.

http://www.businessweek.com/magazine/content/10_30/b4188015313146.htm

May - Economic fears causes Japan machinery order drop

A key indicator of Japanese corporate capital spending fell the most since 2008 in May, data showed Thursday, in a fresh sign that a fragile economic recovery may be losing momentum.
Japan's core private-sector machinery orders dropped 9.1 percent in May from the previous month as firms held back on business investment, the steepest decline since August 2008.
"Firms are not likely to add to their business investment actively in the near term as there is still the risk that (Japan's) economic growth will be hampered due to a possible slowdown in overseas economies," said Norio Miyagawa, economist at Mizuho Securities Research & Consulting.

The fall in the volatile indicator was the first decline in three months and much larger than the median forecast of a 3.0 percent decline in a survey of economists by Dow Jones Newswires and the Nikkei business daily.

Orders rose 4.0 percent in April compared with the previous month.

Exports have driven a recovery from recession by the world's second largest economy, but companies have eyed economic woes in Europe with concern.

The safe-haven yen has soared in recent months due to worries about the global economy, particularly Europe, which if continued will dent companies' repatriated profits and make their goods more expensive overseas.

A Bank of Japan survey last week showed that Japanese business confidence had turned optimistic for the first time since June 2008 as the corporate view of the economy improves.
But the latest data indicates that companies are worried about Japan's vulnerability to a global slowdown, say analysts.

Japan's domestic picture also remains fragile. Unemployment surprisingly edged higher in May to 5.2 percent, raising concerns about the country's ability to cultivate a self-sustaining recovery.
A separate report Thursday showed that Japan's current account surplus in May shrank for the first time in 10 months, hit by slower export growth and a drop in income on overseas investment, the finance ministry said.

The surplus in the current account -- the broadest measure of trade with the rest of the world -- came to 1.21 trillion yen (13.7 billion dollars), down by 8.1 percent from a year ago.

The trade surplus edged down 0.6 percent to 391.0 billion yen with exports rising 33.8 percent against a 37.8 percent rise in imports.

Despite remaining cautious about the impact of Europe's recent sovereign debt crisis on the global economy, Bank of Japan governor Masaaki Shirakawa said Thursday that Japan's domestic economy still showed signs of moderate recovery

http://www.google.com/hostednews/afp/article/ALeqM5gehCjrNU5pVaWNdYE03RzM6nA7Aw

Summer Travelers Aborad to rise 8%

Japanese overseas travelers on summer vacation this year may rise 8.4 percent from the previous year to 2.44 million due to the nation's economic recovery and the yen's appreciation against other currencies, travel agency JTB Corp. forecast Friday.

Overseas summer travel demand between mid-July and the end of August is thus expected to increase for the second consecutive year.

By destination, the number of travelers to China is estimated to increase 14.8 percent to 418,000 due to the ongoing Shanghai World Expo. Those bound for South Korea may number 408,000, up 9.7 percent.

But travelers to Thailand are expected to decline 24.1 percent to 82,000 due to the recent antigovernment riots.

Hawaii-bound travelers are projected at 180,000, up 10.4 percent. Those traveling to Europe are estimated to increase 6.2 percent to 345,000.


http://search.japantimes.co.jp/cgi-bin/nb20100703a5.html

June - Department Store Sales Fall

All major department store chains have reported year-on-year sales drops on a same-store basis for June, partly because consumers were slow in buying midyear gifts and heavy rain reduced consumer traffic in western Japan.

Among them, Takashimaya Co. sales fell 5.5 percent.

This came after recording the first year-on-year gain in 26 months in May. While jewelry and some seasonal goods sold well, sales of clothing and sundry goods fell.

J. Front Retailing Co. said its Daimaru and Matsuzakaya chains saw a 2.5 percent sales decrease after an increase in May as midyear gift sales were sluggish. A large-scale refurbishment at the Daimaru Umeda store in Osaka also affected sales.

Isetan Mitsukoshi Holdings Ltd. reported a 12.0 percent sales drop for its Mitsukoshi chain and a 2.3 percent fall for its Isetan chain. The Mitsukoshi chain suffered heavy drops at its Takamatsu, Kagawa Prefecture, and Matsuyama, Ehime Prefecture, stores as they were hit by heavy rain in June.

http://search.japantimes.co.jp/cgi-bin/nb20100703a6.html